Understanding Health Insurance Exchanges, Penalties and Subsidies

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Health Insurance Exchanges

Under current rules and regulations, you buy health insurance either on the the Federal (or in some states local) exchange or off. Here in Ohio, we are on the Federal exchange.

Understanding your options will help you know whether you qualify for subsides, Medicaid and what your penalty might be. We help our clients sort through all of these matters to find the most suitable coverage for their needs.

Where Can I Find My Health Insurance Exchange?

It depends on the state where you live. Some states have developed their own exchanges and some are participating in federally run exchanges. Either way, most brokers, trained navigators, and some volunteers can help you explore your options.

Your premiums will not be affected by who you choose to work with. You will be able to submit applications electronically, in person or using a traditional paper app. Submitting your enrollment electronically will likely be the fastest way to submit.

Plans sold on the exchange will be labeled as precious metals. There will be four levels offering descending amounts of coverage in this order: Platinum, Gold, Silver and Bronze. Any level will be health care reform compliant.

Should I Buy On The Health Insurance Exchange?

If you qualify for a subsidy (due to your overall income) then yes. There are IRS provisions that allow individuals and families that are within certain proximity of the Federal Poverty Level to receive significant assistance with their monthly premiums.

The amounts will vary between households and as of now will be determined based on personal disclosure. In other words, it’s on the honor system until further notice. Subsidies can vary quite a bit, but you can click here to get a better understanding of how they work.

If your income is too high to qualify for a subsidy, then you do not need to purchase insurance on the health insurance exchanges. In fact, you will likely have more plan choices if you do not.

That is to say that several insurance companies have chosen not to participate in exchanges in some states, but they have not left these states altogether. And it is unclear if there will be different networks of doctors and hospitals depending on the origination of your insurance plan.

Some doctors may treat insurance from the same provider differently depending on whether it was purchase on or off the exchange. You may have a larger network of doctors and hospitals to choose from with plans purchased off your health insurance exchange.

What About The Obamacare Penalties?

They are here. It is still hard to tell how they will be enforced – especially for those who do not file a tax return. But if you do file a tax return, then you will need to provide proof of credible/compliant health insurance coverage.

Penalties for individuals and families will be either a fixed dollar amount or a percentage of income – whichever is higher. And these penalties are slated to increase each year. You can read more about the penalty amounts here.

What About Pre-Existing Conditions?

This is a significant change to health insurance. During the open enrollment window (slated to run from October 1st, 2013 to March 31, 2014) insurance companies cannot turn anyone down due to pre-existing conditions.

This will be very helpful for those who have had trouble obtaining insurance in the past. The lack of medical underwriting will be beneficial, but it does not last all year. You will need to use the open enrollment window each year to avoid being uninsured. Otherwise you can be turned down for insurance outside of the open enrollment window due to pre-existing conditions.

Do I Have Any Other Health Insurance Options?

If you have group coverage, other qualifying coverage (VA/Tri-Care), or you are Medicare eligible, then the Affordable Care Act should have little impact on you. Seniors will be affected very little by this legislation.

And there will certainly be those who try to game the system by jumping in and out of insurance to try and fake compliance. However, if you do not enroll when you are supposed to, then insurance companies can later turn you down if you are in poor health. You would then need to wait until the next open enrollment window which is slated to begin in October of 2014 for a January 2015 effective date. And of course, there are the penalties.

Whether or not the IRS catches up with those who are non-compliant is anyone’s guess. If the IRS choose to be aggressive about this matter, then it may eventually catch up with those who deliberately avoid purchasing health insurance.

HELP!!! This Is All Very Confusing!

Our agency and our brokers are licensed to operate on the health insurance exchanges and off. We can help you explore your options and then enroll in a plan that you feel best fits your needs and budget.